Moving To Another Owner Occupied Home And Qualifying For Mortgage

This BLOG On Moving To Another Owner Occupied Home And Qualifying For Mortgage Was UPDATED On January 12th, 2018

There are strict rules and mortgage regulations with owner occupant home financing.

  • Most home buyers want to purchase their homes as owner occupant homes
  • The main reason is because owner occupied home financing offers the best mortgage rates
  • Owner occupant homes require the least down payment on home purchase
  • All government loans are for owner occupied homes only
  • Buyers of second homes and/or investment properties cannot purchase these types of properties with FHA, VA, USDA Loans
  • Lenders view owner occupant homes as being with the least risk
  • Homeowners will be less likely to bail on their owner occupant homes when things do not go well with them financially than they would on second homes and/or investment properties

Home Buyers who currently own an owner occupied home and are thinking of moving to another owner occupied home and selling exiting current owner occupied home after they move, there are several things to take into consideration:

  • First, the purchase of another owner occupied home needs to make sense
  • Home Buyers who got a job transfer that is 60 miles or further from current home, then the deal makes sense
  • They will most likely qualify the new home purchase going the owner occupied route
  • They can qualify for Two FHA Loans At The Same Time if the new home purchase is at least 100 miles away and the reason for the move is due to job transfer
  • However, if home buyers are purchasing another home which is close by current owner occupied home and the new is the same value and size, then the deal does not make sense
  • On the other hand, if the new home purchase is nearby current owner occupied home but it is substantially larger and the reason for the move is because family have outgrown the current owner occupied home, then the new home purchase will qualify as an owner occupied home
  • By substantially larger, we are talking at least a 30% increase or greater in square footage
  • It can be other factors as well such as downsizing to a town home or condominium or smaller home due to the borrowers children no longer living with the borrowers
  • Before buyers decide on purchasing another home as an owner occupied home, check with a mortgage lender and see if they can do the deal as an owner occupied home
  • There are other considerations that you need to think about

Purchasing And Moving To Another Owner Occupied Home

If you intend on keeping your current owner occupied home and buying another owner occupied home, you need to qualify for both mortgage loans

  • There are instances where having two mortgage payments can disqualify you due to going over the required debt to income ratio requirements
  • One way to solve this problem will be to state that first owner occupied home will be a rental and that home buyer will be renting exiting home after they move to new owner occupied home
  • In order to do this, mortgage lenders require that exiting home have at least a 25% equity on first owner occupied home
  • If not, homeowners does not have to refinance
  • But need an appraisal done on first owner occupied home and pay down mortgage loan so that the loan to value is at 75% and there is 25% equity
  • The appraiser will list the market rental rate for home and the mortgage lender will use 75% of the market rent as rental income

Rental Income: Case Scenario

There are many cases where a homeowner has an owner occupied home but rent the home and live elsewhere. Cases like this is common where the homeowner gets married and live with their new spouse and rent out their current owner occupied home

  • If the homeowner has a rental lease and has been declaring the rental income of their owner occupied home for at least two years on their tax returns, then the full rental income declared on their tax returns can be used
  • On this particular case, 100% of the rental income can be used and not the 75% of the market rent since it has been declared on their tax returns

Qualifying For Mortgage With Direct Lender With No Overlays

Home Buyers who need to qualify for government and/or conventional loans with a direct lender with no overlays on government and conventional loans, please contact us at The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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